India is attractive but not safe for retailers: AT Kearney

India has emerged as the sixth most attractive destination on the radar of international retailers. But with politico-economic uncertainty a...

India has emerged as the sixth most attractive destination on the radar of international retailers. But with politico-economic uncertainty and legislation being the biggest inhibiting factors, it might be a bit early to enter, global consulting firm AT Kearney said.

‘‘In the list of 29 countries, India has been ranked at the sixth position in terms of attracting foreign investment in the retail sector,’’ AT Kearney vice-president Jean Piquet told the news persons during the launch of the first Global Retail Development Index (GRDI), mainly concentrating on fast moving consumer goods (FMCG).

Piquet said that ‘‘India shines bright at number six because of the significant potential with over one billion inhabitants and a retail market expected to grow at 30 per cent annually over the next five years.’’ But, the market is difficult to enter because foreign direct investment is heavily regulated and majority share holding by foreign investors in the retail industry is limited and taxes are relatively high.

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He also exuded confidence that sooner or later the Indian government will allow foreign investment in the retail sector. It may happen within six to 12 months or investors will find a way out, he said. There is a 100 per cent cap on foreign investment in this sector.

In spite of problems like complex bureaucratic clearance process, high tax rate on organised retail, archaic laws leading to poor availability and high costs of real estate, India holds a promise, Piquet said.

According to the study China tops the GRDI list followed by Slovak Republic, Hungary, Russian Federation, Morocco and India. GRDI, which covered 29 countries, took note of the three major points – the country’s economic viability, attractive proposition of retail market and the right time to enter the market.

The GRDI study was carried out by AT Kearney in order to prioritise the choice for retailers while entering new markets and to facilitate their global expansion plans outside home markets.